The creation of the iPod in 2001 turned the hope of mass digital distribution into a reality. Since the introduction of Apple's trademark white portable media player, millions of consumers have experienced the thrill of mobile digital entertainment. The iPod's crisp sound, nearly unlimited song capacity, and packaged cool—along with Apple's funky iTunes music download store—has inspired many music lovers to dis their bulky old music players and part ways with CDs and tapes.

Just when it seemed that things couldn't get any better for iPod fans, Apple CEO Steve Jobs announced that his company will begin selling movies through iTunes for as low as $9.99 per download. The move is expected to jump-start a nascent movie-downloading industry, much like Apple's venture into selling music online popularized legal song downloads. For certain, the announcement reveals a quantum leap in the capabilities of portable media players. However, despite high expectations, some industry watchers question whether or not consumers will enjoy watching full-length movies on tiny screens.

For now, Apple has a sustainable competitive advantage in the digital downloads market. However, recent offerings by major competitors should serve as a reminder to the iPod maker that the race is not always to the swift-to-market. Microsoft Zune entered the portable media player space in fall 2006, and Amazon Unbox is now offering fast, inexpensive movie downloads. These recent products, if not taken seriously, could raise the specter of Apple's past blunders--most notably, Apple's surrender of the desktop market to the dull-but-ubiquitous PC. But Apple has moved beyond its past. CEO Jobs, more than anyone, knows that marketers can never afford to rest on their laurels.